New Oil Tax Proposal Lowers Base Rate

Senate Finance Committee bill still eliminates progressivity

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By Bill McAllister
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Story Created: Mar 12, 2013 at 4:52 PM AKDT

Story Updated: Mar 12, 2013 at 5:12 PM AKDT

ANCHORAGE - In Juneau, the Senate Finance Committee has unveiled a new version of a bill to reduce oil production taxes.

The bill sets a base tax rate of 30 percent of company profits, up from the 25 percent in current law but down from the 35 percent that was proposed earlier by the Resources Committee.

Senate Republicans say their aim is to keep the tax rate percentages stable, in part by eliminating the progressive feature that makes the tax go higher when the price of oil goes up.

"I personally have been sold on the idea that it is imperative for Alaska to move to a system where we have a more flat rate of tax that is more predictable over a gamut, a cross-section of prices that industry all across the globe can understand and digest easily,” said Senator Lesil McGuire, R-Anchorage.

Democrats continue to insist that tax breaks should be tied to investment in Alaska for new production.

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